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lissacoffey
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Beginner

Cisco has unveiled a single Enterprise License Agreement that covers all of its software. The new Cisco ELA lets customers exceed contract limits without penalty. Cisco has brought its product licensing in line with the company's ongoing transformation into a mostly software business, a shift that has yet to reverse the vendor's declining top-line revenue.The company introduced last week a single Enterprise License Agreement (ELA) that covers the vendor's entire software portfolio, which includes security, network infrastructure, computing and storage, and collaboration and video conferencing.\

New Cisco ELA terms

Under the new agreement, customers would sign a three- or five-year contract for any of Cisco's software and have the option of purchasing other products and adding them to the same license.

The Cisco ELA covers all deployment models -- on premises or in the cloud -- and customers can move software from one platform to another anytime. Cisco has introduced a license management portal that lets companies monitor the number of users, servers or other consumption metrics covered by the agreement.

Cisco includes what it calls a 20% "growth allowance" in every license. A customer, for example, could exceed the number of users up to the allotment without having to change the agreement. Companies that exceed the allocation can modify the license without having to pay a retroactive charge.

"The 20% allowance is a nice gimmick that might benefit some companies that are truly in growth mode," said Shamus McGillicuddy, an analyst at Enterprise Management Associates Inc., based in Boulder, Colo. "I can see that being a welcome benefit to companies that are used to enterprise software vendors hitting them with cash penalties for exceeding their licenses."

The contract covers the security, analytics and infrastructure software the company is currently using and plans to use over the next several years, said Westfield CIO Denise Taylor. As a result, the mall builder has an IT budget that's unlikely to change over the life of the contract.

The shift was not problem-free. Westfield had to overhaul how it accounted for the consumption of Cisco products. Financial systems that tracked the separate IT agreements for each mall now had to monitor each center's use of technology and charge it accordingly.

"There is a heavy amount of collaboration that needs to happen with finance to make sure that everybody is on the same page," Taylor said. Working out those problems led to a new accounting system that was simpler and more efficient than tracking a couple hundred separate contracts that expired at different times.

The recurring revenue that accompanies software sales is key to lessening Cisco's dependence on hardware -- particularly the routers and switches that remain the company's largest business. Sales of the products are declining, as customers move more software to cloud providers.

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